BOSTON - DraftKings Inc. (NASDAQ: NASDAQ:DKNG), a digital sports entertainment and gaming company, on Thursday announced an increase in its revenue forecast for 2024 and revealed a $1 billion stock repurchase program. The company's revised revenue guidance for the year is now set between $5.05 billion and $5.25 billion, a notable rise from the previous range of $4.80 billion to $5.00 billion.
This updated guidance reflects a projected year-over-year growth of 38% to 43%. Despite the positive adjustment in revenue expectations, DraftKings has lowered its forecast for 2024 adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), now anticipating a range of $340 million to $420 million, down from the earlier estimate of $460 million to $540 million. However, the company maintains its 2025 adjusted EBITDA outlook, expecting it to be between $900 million and $1.0 billion.
The revised financial outlook follows DraftKings' reported second-quarter revenue of $1.104 billion, marking a 26% increase from the same period last year. The growth is attributed to strong customer engagement, efficient acquisition of new customers, expansion into new jurisdictions, and the impact of acquiring Jackpocket Inc. on May 22, 2024.
DraftKings' average monthly unique paying customers (MUPs) surged by 50% year over year in the second quarter, reaching 3.1 million. Even without the Jackpocket acquisition, MUPs would have seen a significant increase of approximately 34%. In contrast, the average revenue per MUP (ARPMUP) experienced a 15% decline, primarily due to lower ARPMUP for Jackpocket customers, customer-friendly sports outcomes, and increased promotional investments for new customer acquisition.
On July 30, 2024, the company's Board of Directors authorized the repurchase of up to $1.0 billion of its Class A common stock. The repurchase program is flexible, with no obligation to acquire a specific number of shares and may be terminated at any time.
DraftKings is actively expanding its mobile sports betting and iGaming footprint. The company launched its Sportsbook product in Washington, D.C. on July 25, 2024, and is now live with mobile sports betting in 25 states and D.C., covering approximately 49% of the U.S. population. It is also live with iGaming in five states, representing about 11% of the U.S. population, and in Ontario, Canada.
Looking ahead, DraftKings is preparing to launch its Sportsbook product in Puerto Rico, pending necessary approvals. Additionally, several U.S. jurisdictions representing about 12% of the population are considering legislation to legalize mobile sports betting, while others accounting for approximately 13% of the population are exploring iGaming legalization.
The company's financial results and other detailed information are available in the financial statements under the caption "Financial Results." The information in this article is based on a press release statement.
In other recent news, DraftKings Inc. has seen significant developments. The company's ongoing shift to online sports betting and iGaming has been bolstered by a 33% surge in sports betting revenues, according to state gaming disclosures. Furthermore, DraftKings has successfully launched online sports betting in North Carolina, which quickly became a major player in terms of revenue. BMO Capital Markets has maintained its Outperform rating on DraftKings, with a steady price target of $54, citing the company's robust standing in the digital gaming space.
DraftKings has also announced plans to enter the Washington D.C. market, contingent on receiving necessary licensure and regulatory approvals. This move is facilitated through a market access agreement with D.C. United. Upon launching, Washington D.C. will become the 29th jurisdiction in North America where DraftKings Sportsbook is available.
Various analyst firms have made adjustments in their outlooks for DraftKings. Truist Securities lowered its price target on the company's shares to $53, citing potential legislative changes in Illinois. Despite this, Piper Sandler maintained an Overweight rating on DraftKings, anticipating the company's second-quarter earnings call. Stifel reiterated its Buy rating on DraftKings, encouraging investors to maintain their positions ahead of the company's earnings report. These are the recent developments for DraftKings.
InvestingPro Insights
DraftKings Inc. (NASDAQ: DKNG) has shown an impressive revenue growth trajectory, with the last twelve months as of Q1 2024 reflecting a 57% increase in revenue, reaching $4.07 billion. This aligns with the company's upbeat revenue forecast for 2024, which they've now adjusted upwards to between $5.05 billion and $5.25 billion. In line with this growth, analysts are optimistic, anticipating sales growth in the current year, which is one of the InvestingPro Tips for DKNG. Moreover, the company's aggressive expansion into new markets is a likely contributor to this projected growth.
The stock's volatility is something investors should be aware of, as DraftKings' share price movements have been quite volatile, which is another key insight from InvestingPro Tips. This volatility can be a factor for those with a lower risk tolerance or a shorter investment horizon. However, for long-term investors, the volatility may present opportunities to buy during dips, especially considering analysts predict the company will be profitable this year.
From a valuation perspective, DraftKings is currently trading at a high Price / Book multiple of 20.7, which signals a premium market valuation compared to its book value as of the last twelve months. This is a crucial piece of InvestingPro Data that investors should consider, especially when evaluating the company's stock for potential investment. Additionally, the company's market capitalization stands at $17.16 billion, reflecting its significant presence in the digital sports entertainment and gaming industry.
For investors seeking more comprehensive analysis and additional insights, there are 11 more InvestingPro Tips available for DraftKings at https://www.investing.com/pro/DKNG, which can further guide investment decisions in this dynamic sector.
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